B.C. is now home to a new car rental service that’s about to bring a new addition to the sharing economy.
Turo is a peer-to-peer service through which car owners list their vehicles on a website for renters to find. The San Francisco-based company launched in Canada in 2016 in Alberta, Ontario and Quebec and now has 220,000 users in Canada.
The service is being introduced in this province after many B.C. residents expressed interest in the service after having used it in other provinces.
“It is worth noting that 7% of Turo members in Canada are actually residents of British Columbia using the Turo platform in other provinces and in the U.S.,” said Cedric Mathieu, director of Turo in Canada.
Mathieu said B.C. has the potential to be the biggest Turo market in Canada because of its strong tourism industry and outdoor culture.
The company’s business model allows for car owners to make money on rentals and allows renters to choose from a wide array of car options at varying prices for a daily rate with no membership fee.
Turo claims to be 30% to 35% less expensive than other car rental services. The service covers car owners through a commercial insurance policy, and, depending on the insurance plan they choose, car owners can receive between 65% and 90% of the trip price.
In Alberta, Ontario and Quebec, the car owners are protected by their personal insurance and also by Turo’s commercial insurance through its partner, Intact Insurance, when the car is used for a Turo service.
But the company faced a challenge in B.C., where the insurance framework is different.
In this province, owners must opt into a commercial insurance policy through the Insurance Corp. of British Columbia to be a part of the Turo platform.
In B.C., Turo works in partnership with independent car entrepreneurs and businesses that already have their own commercial insurance in place. This could be people who have multiple cars already in their fleet, exotic car rental companies or independent car rental companies with an interesting selection of cars.
“Those car rental entrepreneurs are curated by Turo to make sure they can offer an experience that’s in line with what car renters expect of a Turo experience,” Mathieu said.
This new model also means that car owners will not have the additional insurance offered through Turo that owners in other provinces have. But Turo is making sure that the commercial insurance that B.C. car owners have allows for car rental services and provides up to $1 million of liability insurance. While the liability of the car rental falls on the owner, it also means that Turo takes a smaller commission, leaving a larger return for owners.
University of British Columbia Prof. Tim Silk said while the Turo model is intriguing, the company is entering a challenging car-sharing market. He said many customers that are used to car-sharing offerings that already exist in B.C., such as Evo and Car2go, might not want to make the switch to Turo because they are already utilizing an existing, successful service.
Silk said another possible issue is that Turo is part of a two-sided market. For the company to thrive, it needs to establish a demand for car owners and a demand for car renters, and it would have to build those markets concurrently.
“Very few of those types of companies tend to survive because you blow through a lot of money trying to build both markets,” Silk said.
Mathieu said that since Turo is in its early stage in B.C. it will focus on bringing providers on board and expanding the supply and demand across the province within the next few months.
Silk said Turo’s advantage is the vehicle variety it brings to the table – something existing car rental or car-sharing companies lack.
The company aims to offer renters options from electric vehicles to luxury models and cars for day-to-day use.
“The big issue with the rental car business is what we call fleet management,” Silk said. “They’ve got an asset base of vehicles. And having the right vehicle in the right place at the right time is extremely difficult. From an operation standpoint, what could be attractive about Turo is that they’ve got an extremely broad and diverse … network of fleet.”
Mathieu said he’s confident the company can thrive in B.C. due in part to the way the services are being rolled out through smaller entrepreneurs. Since the entrepreneurs have the fleet and offer the variety and professional services, Turo would merely be a platform on which these companies can advertise their offerings.
He said Turo’s marketing strategy will rely on word of mouth as renters and owners talk about their experience with the company and its service.
“Vancouver is a great travel market and has a lot of potential,” he said. “We’d love to be there and operate our model as soon as possible. We’re very confident we’ll get there, but this is the first step and we’re really excited about it.”